With New OT Rules in Limbo, HR Faces Big Wage/Hour Decisions in 2017

With New OT Rules in Limbo, HR Faces Big Wage/Hour Decisions in 2017

November was a month of huge surprises for HR professionals—surprises that spell uncertainty and big changes for workplace law (and your job) in 2017.

First came the shocking election of Donald Trump, who is expected to rewrite numerous workplace laws and regulations next year. Then came another stunner: a federal court in Texas temporarily blocked the Department of Labor’s new white-collar overtime rules from taking effect on Dec. 1. The move left HR and payroll scrambling to revise their compensation plans … and confused about what to do next.

The injunction is temporary, so the new DOL rules—which aim to raise the overtime salary limit from $23,660 annually to $47,476—could still be implemented in the coming weeks or months. Or the injunction could be upheld. Or the court (or Trump administration next year) could scrap the rules completely and go back to the drawing board.

The Nov. 22 preliminary injunction isn’t permanent. It simply preserves the previous overtime rule (specifically, keeping the salary threshold at $23,360 a year) until the court has a chance to review the full merits of the case. But the judge’s wording in the injunction indicates he is likely to strike down the new regulation. The case could go to the U.S. Supreme Court.

If the issue drags on, the new Trump Administration may have a chance to rewrite the rules itself. Expect Trump’s Department of Labor to favor a phased- in, smaller increase in the salary threshold (below President Obama’s proposed $47,476 limit) and removal of the automatic every-three-years threshold increase that was included in the Obama rules.

The timing of last week’s ruling—just 10 days before they were to take effect and two days before Thanksgiving—created compensation chaos for HR. Thousands of employers had spent recent months raising white-collar workers’ pay, changing exempt/nonexempt classifications, rewriting job descriptions and altering schedules and reporting relationships to adjust to the new salary threshold.

Employers that had already made changes to their compensation plans will need to decide whether it makes business sense to suspend, alter or reverse those changes. Many of those pay raises and classification changes will be difficult to undo, and reversing course too soon could damage employee morale, particularly if the new rules do eventually take effect.

If your organization hadn’t yet made any compensation changes, it’s best to take a wait-and-see approach. There are likely many more twists and turns to this roller-coaster story and HR must be prepared to react to those changes—whether they come next week or next year.

The bottom line: Wage-and-hour rules are just one of the massive changes coming to U.S. employment law in 2017. Don’t be caught off guard. Join me at LEAP 2017, March 29-31in Las Vegas to learn how HR must comply with all the big changes coming from Washington and the states. Plus, you’ll have a fabulous time with your peers at the legendary Bellagio!